Trade secrets

The fourth part of the Mitchell test requires the court to judge how important it is to let the reporter’s source remain anonymous. The Mitchell decision itself says, “[W]hen the information relates to matters of great public importance, and when the risk of harm to the source is a substantial one, the court may refuse to require disclosure even though the plaintiff has no other way of obtaining essential information.”

This part of the appellate ruling is truly frightening and far, far outside mainstream jurisprudence. In this section, the Sixth District Appellate Court literally states that there can be no accountability for a reporter publishing a trade secret, that First Amendment rights trump property rights, and that Apple’s planned FireWire audio interface is a monumental development in human history akin to Gutenberg’s invention of movable type:

Apple first contends that there is and can be no public interest in the disclosures here because “the public has no right to know a company’s trade secrets.” Surely this statement cannot stand as a categorical proposition. As recent history illustrates, business entities may adopt secret practices that threaten not only their own survival and the investments of their shareholders but the welfare of a whole industry, sector, or community. Labeling such matters “confidential” and “proprietary” cannot drain them of compelling public interest. Timely disclosure might avert the infliction of unmeasured harm on many thousands of individuals, following in the noblest traditions, and serving the highest functions, of a free and vigilant press. It therefore cannot be declared that publication of “trade secrets” is ipso facto outside the sphere of matters appropriately deemed of “great public importance.”

The court must know that this argument is disingenuous. Apple did not argue that a company’s trade secrets are
never
in the public interest, especially since the Mitchell test itself requires a court to determine if the information being protected is in the public interest. Nothing in the information about Apple’s FireWire audio interface, disclosed or undisclosed, could “avert the infliction of unmeasured harm on many thousands of individuals” or “serve the highest functions of a free and vigilant press.” Yet by ignoring the plain language of Mitchell, the appellate court seems to rule that the public has a right to know a company’s secrets if they can be discovered. This turns decades of law on its head, including U.S. Supreme Court rulings cited in this case that put trade secret and patent law on equal footing.

The court continued:

Apple alludes repeatedly to the notion that the publication of trade secrets cannot be found to serve the public interest because of the policy embodied in trade secret law itself, which presupposes that trade secrets possess social utility justifying special protections against wrongful disclosure. This is, of course, a false dichotomy. It is true that trade secrets law reflects a judgment that providing legal protections for commercial secrets may provide a net public benefit. But the Legislature’s general recognition of a property-like right in such information cannot blind courts to the more fundamental judgment, embodied in the state and federal guarantees of expressional freedom, that free and open disclosure of ideas and information serves the public good. When two public interests collide, it is no answer to simply point to one and ignore the other. This case involves not a purely private theft of secrets for venal advantage, but a journalistic disclosure to, in the trial court’s words, “an interested public.” In such a setting, whatever is given to trade secrets law is taken away from the freedom of speech. In the abstract, at least, it seems plain that where both cannot be accommodated, it is the statutory quasi-property right that must give way, not the deeply rooted constitutional right to share and acquire information.

The trial court famously said, “An interested public is not the same as the public interest,” as part of a section distinguishing that the public’s thirst for gossip and rumor is not the same as information that serves the entire body public. The appellate court’s quotation here again turns that upside down, and the court apparently hopes you won’t notice.

Beyond that, though, this paragraph is a substantial rewrite of First Amendment jurisprudence. The “deeply rooted constitutional right to share and acquire information” has been constitutionally limited by property rights since the founding of the nation. They’re called copyrights and patents, and as noted, the US Supreme Court says that trade secrets and patents share equal footing.

Again, we propose the manuscript of the next “Harry Potter” book as an example of why the court’s analysis is fundamentally flawed. Imagine that someone managed to steal that manuscript and leak it to a reporter whose Web site (or even newspaper) published it in its entirety, or even published substantial sections that gave away the secret plot and outcome. No court would say that the reporter’s right to free expression trumps J.K. Rowling’s property rights to her own creation, even though literally tens of millions of people around the world would
very much
like to know what that manuscript says. While it sounds good to say that First Amendment rights trump a “quasi-property right,” it’s flatly ridiculous to believe that someone else has the right to publish your works and ideas without your permission, and that the courts should leave you with no recourse for justice.

To those who would say that the details of a FireWire audio recording device cannot possibly be in the public interest, the court says otherwise. Amicus briefs on Apple’s side pointed out the DVD copy protection case (
DVD Copy Control Association v. Bunner
) that allowed a trade secrets injunction against the online publication of code to remove DVD copy protection. The court noted these briefs, but said that in the DVD case, the published information “convey[ed] only technical information about the method used by specific private entities to protect their intellectual property.” But for “Asteroid,” the court distinguishes:

Here, no proprietary technology was exposed or compromised. There is no suggestion that anything in petitioners’ articles could help anyone to build a product competing with Asteroid. Indeed there is no indication that Asteroid embodied any new technology that
could
be compromised. Apple’s own slide stack, as disclosed in sealed declarations which we have examined, included a table comparing Asteroid to existing, competing products; there is no suggestion that it embodies any particular technical innovation, except perhaps in the fact that it would integrate closely with Apple’s own home recording software — a feature reflecting less a technical advance than a prerogative of one who markets both hardware and software. The newsworthiness of petitioners’ articles thus resided not in any technical disclosures about the product but in the fact that Apple was planning to release such a product, thereby moving into the market for home recording hardware.”

Make no mistake: in this passage, the appellate court that sets precedent for Silicon Valley is saying, unambiguously, that plans to introduce a product cannot be a “trade secret.” Later on the same page, the court tries to back out of expressly saying that, but then winds up saying it again in different words:

Publishing a computer manufacturer’s proprietary code may thus be compared to publishing a miller’s secret recipe for a breakfast cereal. What occurred here was more like publicizing a secret
plan to release
a new cereal. Such a secret plan may possess the legal attributes of a trade secret; that is a question we are not here required to decide. But it is of a different order than a secret recipe for a product. And more to the point, the fact of its impending release carries a legitimate interest to the public that a recipe is unlikely to possess… Whether or not confidential marketing plans constitute trade secrets under the governing statutory language, it cannot be seriously held that their protection has any direct and obvious tendency to serve the central purposes of the law.

Something is either a trade secret or it is not. If the appellate court says that protecting confidential marketing plans does not serve the central purpose of the law, it is saying that those plans are not trade secrets, no matter how many times it also says that it’s not deciding whether they’re trade secrets or not. The court cannot say that it doesn’t know if the “Asteroid” document was a trade secret or not, and then rule that the document doesn’t “serve the central purposes of the law” so its disclosure is no big deal. As the court repeatedly told Apple, you can’t have it both ways.

The next section of the ruling is all but indescribable:

More generally, we believe courts must be extremely wary about declaring what information is worthy of publication and what information is not. At first glance it might seem that Asteroid is nothing more than a hobbyist’s gadget with no ponderable bearing on the great issues of the day. But such an impression would be, in our view, erroneous. With the release of this product, one of the world’s leading manufacturers of personal computing products would be throwing its considerable muscle behind the development of sophisticated devices for creating high-quality audio recordings on a home computer. Such a development would inevitably contribute to blurring the line between professional and amateur audio production, and hence between professional and amateur composing and performing, in much the same way that the personal computer coupled with telecommunications technology has blurred the distinction between commercial and amateur publishing. The decentralization of expressive capacity represented by such developments is unquestionably one of the most significant cultural developments since the invention of the printing press.

While it may be tempting to think of Asteroid as a mere gizmo for nerds, such a device may also be the means by which the next Bob Dylan, Julia Ward Howe, or Chuck D conveys his or her message to the larger world. Music is of course a form of speech, from the stirring hymns of Charles Wesley to the soaring meditations of John Coltrane.

Who knows what latter day Woody Guthries may be lifted from obscurity by this new technology, in defiance of the considered judgment of recording executives that once might have condemned them to obscurity? Apple’s commitment to such a product could prove to be an important step in democratizing the production and publication of music, as other digital technologies have democratized the publication of news and commentary.

If this is true, then by definition, any product that Apple Computer makes is of “public interest,” and the company has no recourse for the leaking of any of its product plans. While Apple fanboys may think that’s a fine idea, there are obviously dozens of companies that would love to know what new iPod features Apple has planned, and would do whatever they could to help someone publish them as “news.”

These observations are intended not to demonstrate the innate newsworthiness of petitioners’ articles but rather to illustrate the peril posed to First Amendment values when courts or other authorities assume the power to declare what technological disclosures are newsworthy and what are not. The digital revolution has been compared to the Industrial Revolution in terms of its potential impact on society and citizens. Apple is widely seen as a central figure in this cultural sea change. The online version of a leading business magazine has quoted a securities analyst’s descriptions of Apple as “ ‘the nexus of [the] digital lifestyle revolution’ “ whose products “frequently incorporate disruptive changes in technology” and whose innovations “fundamentally alter the way we li[v]e.” The dry technical detail that pervaded petitioners’ articles should not be permitted to obscure the fact that any movement by such a cultural leader into a whole new area of expression — as was promised by the Asteroid product — is newsworthy.

In the first sentence of this paragraph, the appellate court says that courts should not declare what technologies are or are not newsworthy. In the last sentence of the same paragraph, the same court, with no ambiguity or wiggle room, declares the Asteroid technology is newsworthy.

It is often impossible to predict with confidence which technological changes will affect individual and collective life dramatically, and which will come and go without lasting effects. Any of them may revolutionize society in ways we can only guess at. The lawful acquisition of information necessary to anticipate and respond to such changes is the birthright of every human, formally enshrined for Americans in our state and federal constitutions. The publications at issue here fully implicated that birthright and the interests protected by those constitutional guarantees.

We’re going out on a limb here, but we’ll guess that not even Jason O’Grady’s mother believes that her son’s Apple rumor site affects the birthright of all Americans, enshrined in constitutions, to anticipate how dramatically a FireWire audio interface — one that the court already said was similar to several products that existed in November 2004 — will change individual and collective life dramatically.

The court is overselling O’Grady’s site to compensate for the plain fact that a FireWire audio box does
not
affect the general public. No one is at risk, no paradigms are shifting, and no one expects the history of the planet to be forever changed by this device — except the Sixth District Appellate Court, which finds it so compelling that it has to destroy trade secrets law so we can learn more about this magical box.

Yet even in the end, the court is forced to admit that Apple has shown enough to prove that the “Asteroid” presentation was a trade secret after all. The fifth and final part of the Mitchell test is whether the plaintiff has a strong case on the merits, for a weak case would lean against disclosure. There’s no need to break a reporter’s confidentiality with his source for a case that the plaintiff obviously cannot win.

The court wrote, “Here it can be reasonably inferred from the circumstances shown by Apple that someone violated a duty not to disclose the information in question, and that the information constituted a trade secret. Apple has thus presented enough evidence to support a reasoned inference of wrongdoing on someone’s part. Therefore this factor favors disclosure, or more precisely, does not weigh against it.”

But for the court, it’s too little and too late, as the ruling concludes: “On balance however, neither this factor nor the other factors favoring disclosure possess sufficient weight on this record to overbalance the countervailing factors, particularly the inadequacy of Apple’s showing that it exhausted alternative avenues of investigation.” The court then concluded by issuing a writ of mandate requiring the trial court to “set aside its order denying petitioners’ motion for a protective order and to enter a new order granting that motion.”